UK markets made a strong start in this shortened trading week with European equity futures rising this morning as some commentators turn less gloomy.

At 9am, the benchmark FTSE 100 index is up 2.7% at 5,563.52, led by aero-engineer Rolls-Royce (RR.), while the rally of the mid cap FTSE 250 is even firmer, jumping 4.6% at 14,752.45.A slowdown in the growth rate of new US coronavirus cases may help put a floor under stocks and dampen volatility, according to analysts at investment bank JPMorgan Chase.

There is also encouraging news this side of the pond, with Europe’s four worst-hit countries reported declines in the pace of coronavirus deaths. Italy recorded its lowest daily number in two and a half weeks while Spain’s toll declined for a third straight day and fatalities also dropped in the UK and France.

Oil prices are giving up some of last week’s huge rally, with Brent crude off 1.4% at $33.64, having previously hit month-long highs of $34.11 after a virtual gathering of the OPEC+ alliance that was originally scheduled for Monday was postponed to Thursday. That delay came as Saudi Arabia and Russia traded barbs over who was to blame for the collapse in oil prices.

STOCKS MOVING THE MARKET

Rolls-Royce led the FTSE 100 leader board on Monday after slashing ‘at least’ £750m off cash costs this year, including 20% salary cuts for senior management, as thousands of planes stay grounded.

The engine manufacturer will no longer recommend its 7.1p final dividend for 2019 ‘in light of the uncertain macro outlook’ which will bolster cash coffers by an extra £137m, while the company has also secured an additional £1.5bn revolving credit facility commitment with a consortium of banks, which will increase overall cash resources to £6.7bn.

That news was widely welcomed by investors and sent the share price soaring nearly 16% to 290.8p.

Industrials Meggitt (MGGT) and Melrose (MRO) were also in demand, jumping 15% and 10% respectively at 250p 82.94p, while insurance group Legal & General also rallied, up around 16% at 185.5p.

Book and convenience retailer WH Smith (SMWH) climbed 3.7% to £10.48, even as it announced that it was in the advanced stages of preparation for an equity raising.

Thermal processing services provider Bodycote (BOY) rallied 9% to 530p, with its proposal to pay a final dividend ‘under review’.

Software company Sage (SGE) has axed its £250m share buyback programme, while warning that it was expected to miss its full-year revenue and margin guidance. But shares in the accounting software firm nudged 1.25% higher to 565.2p as its talked up its ‘strong balance sheet’ that includes around £900m of cash and another £400m of unused borrowing capacity.

Oil services company Petrofac (PFC) gained 3% to 203.2p having scrapped its 2019 final dividend on reduced headcount by 20%.

SPECIAL DIVIDEND SCRAPPED

Measurement tool company Spectris (SXS) reversed 2% to £22.50 as it scrapped a special dividend and postponed a final dividend.

Spectris said first-quarter trading had been impacted by the pandemic, with like-for-like sales slipping 10% on-year.

Wagamama and Frankie & Benny's owner Restaurant Group (RTN) jumped 18% to 42p after it scored a covenant waiver and facility increase from its lenders.

Restaurant Group also said it had shrunk its board to five non-executive directors from six, while cutting director and executive salaries.

Recruitment company SThree (STHR) reversed earlier gains to fall 2% at 201.5p, even as it scrapped its final dividend and cut executive salaries by 20%.

Furniture and flooring retailer ScS (SCS) shed more than 3% to 151p as it cancelled its interim dividend. The company also said outgoing chief executive David Knight had agreed not to retire before the end of July 2021 to offer flexibility during a challenging period.

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Issue Date: 06 Apr 2020